Can Israel build big, sustainable companies?

The Israeli start-up ecosystem is a well-oiled investment machine that has been turning out companies for the better part of two decades.

The country has its own homegrown angels like Gigi Levy-Weiss and Eilon Tirosh, venture capital firms like Carmel, JVP, Pitango and Canaan, equity crowdfunding firms like OurCrowd and iAngels, and Silicon Valley firms with offices on the ground like Battery Ventures and Sequoia (that’s not to mention the new wave of Asian investors betting on Israeli start-ups).

But, for all the “Start-up Nation” fanfare, Google’s acquisition of Waze – Israel’s highest profile start-up exit to date – was valued at just $1.1B. And, while Israel officially has two Unicorn companies on the CrunchBase list (more if you count companies like Taboola and WeWork), only a handful of Israeli companies have actually exited in the billion dollar range. This is, at least in part, by design.

Yossi Vardi, one of Israel’s most successful angel investors, has advised Israeli entrepreneurs to build great products that can, like his portfolio company ICQ (which sold to AOL), be acquired by bigger companies in Silicon Valley.

Eden Shochat certainly knows something about early exits. Facial recognition company, which he co-founded, sold to Facebook for a reported $60M after raising just $5 million in investment. But now, as a founding partner at Aleph, a $150 million early stage VC in Tel Aviv, his goal is to fund Israeli entrepreneurs who want to build global businesses. Some of his portfolio companies include Meerkat, FreightOS and Lemonade.

Recently, I sat down with Eden at WeWork (one of his portfolio companies) in Tel Aviv where he shared with me his vision for what he and others refer to as the “Scale-up Nation,” an Israeli ecosystem made of companies that are built to last, rather than Vardi’s vision of products that are built to exit. After our meeting, we exchanged notes about the feasibility of building Google sized companies out of Israel, the impact of regional violence and how, if at all, Aleph really differs from the older guard of Israeli investors.